Sempra’s Mexico Unit Surges on First Day After IPO

Mexican President Enrique Pena Nieto and the heads of the nation’s biggest political parties signed an accord in December calling for the passage of a bill that would open up energy-industry activities including refining and fuel distribution to private investment. Photographer: Geraldo Caso /AFP via Getty Images

March 22 (Bloomberg) -- Infraestructura Energetica Nova
SAB, the Mexican unit of U.S. natural-gas utility Sempra Energy,
jumped after selling $600 million of shares in the country’s
first initial public offering of an energy company.

Nova rose 17 percent to 39.62 pesos at the close of trading
in Mexico City after pricing the shares yesterday in an initial
public offering at 34 pesos each. Investor orders totaled more
than 10 times the amount offered, according to two people with
knowledge of the transaction, who asked not to be named because
the figure wasn’t publicly disclosed.

Nova is taking advantage of surging investor interest in
Mexico’s energy industry, which has been mostly kept under state
control. President Enrique Pena Nieto and the heads of the
nation’s biggest political parties signed an accord in December
calling for the passage of a bill that would open up parts of
the industry including refining and fuel distribution to private
investment.

“It’s the only way to play the energy reform” in the
Mexican equities market, said Aldo Miranda a trader with
Intercam Casa de Bolsa SA in Mexico City in a telephone
interview. “There was a lot of demand and there is a lot of
optimism.”

The state oil company, Petroleos Mexicanos, isn’t publicly
traded.

Future Growth

Nova, based in Mexico City, raised 7.42 billion pesos ($600
million) in the initial offering including an exercised
overallotment option for underwriters, according to a statement
from the Mexican stock exchange.

In an filing prior to the sale, the company had projected
the shares would price in a range of 30 pesos to 34 pesos.

“The price was about right, but it’s not about the
valuation,” Miranda said. “It’s more about the future growth
that may occur in the energy sector in Mexico.”

The benchmark IPC index of 35 Mexican companies rose 0.4
percent.

Pemex, as the state oil producer is known, in January
announced a joint venture with Sempra to build the first phase
of a natural-gas pipeline in Northern Mexico. Sempra also won a
contract in October with state power utility Comision Federal de
Electricidad, or CFE, to build a gas pipeline and operate it for
25 years.

The CFE pipeline would connect gas supplies from Arizona to
the port of Guaymas in northwestern Mexico. Once the project is
completed the pipeline will have capacity for 760 million cubic
feet a day. Investment in the CFE project may be $630 million to
$730 million, according to a presentation from Pemex.